Suresh KumarTiE Dubai, 18th April 2004 2Entrepreneurship Global PerspectivesChile , Korea, New Zealand, Uganda and VenezuelaHighestHighBrazil, China, India and MexicoLowestFrance, Croatia, Chinese Taipei, Netherlands, Japan, Russia and PolandOn all measures of entrepreneurial activity the highest group is about six times higher than the lowest entrepreneurial group 3Entrepreneurship - Global Perspectives

Global Entrepreneurship Monitor research findings

60 of the entrepreneurs are in the age group 25-44

66 had an overriding entrepreneural objective and 27 were forced into entrepreneurship.

A positive cultural context comprises

social acceptance of entrepreneurial careers

respect for new business success

and positive media coverage

In the opinion of 800 experts in the Global Entrepreneurship Monitor (GEM) countries, consider most governments are least effective in sponsoring programs or policies to enhance entrepreneurship.

4Entrepreneurship - Global Perspectives

In a society that is ill-governed, wealth and entrepreneurship are frowned upon. However in a society that is well governed poverty is something to be ashamed of

Descartes, a Greek philosopher, and a B.C. contemporary of Aristotle

5Entrepreneurship A collection of skill sets

Experience is invaluable not merely to avoid older errors and to make only new mistakes, but also to gain sufficient people and resource management skills, as to bring important qualities of intellectual challenge and healthy skepticism, before commencing new ventures.

If overdone these qualities can abort innovation and enterprise, but if undone, then, they are equally a recipe for some costly mistakes, especially involving other peoples monies

6Entrepreneurs Born Made

Entrepreneurship is not an art but an imperfect science. It is a blend of risk taking and management skills that can be acquired, cultivated and honed.

Entrepreneurship is historic and age old but has come into vogue in the advent of the New Economy.

The skill sets are somewhat different between what the old economys and the new economys activities require.

The commonalities are risk-taking, innovation, focus, creating value and putting together a winning combination and a blend of professional management, and enterprise creating and nurturing skills.

7 Dos Donts

Risk takingFear Venture capitalLack of organisational skillsProfessional mgtGreedEnergyLack of balanceEnthusiasmInnovationLack of cluster supportValue creation 8Financial Fulfilment life cycle and growth phaseSeed stage Funding comes from the founder's personal funds or family and friends who believe in the idea. VCs and Angels are approached once the initial corpus is exhausted. Start-up stage Funding at this stage provided by "Angel Investors" Early stage Funding business angels or venture capitalists who specialize in early stages of development Growth stage Funding provided by venture capitalists or institutional investors Maturity stage Financing is provided by VCs for mergers and acquisitions, MBOs (Management Buy-Outs) and MBIs (Management Buy-Ins) 9The negotiation process is characterized by numerous concerns being raised, both for the entrepreneurs and the investors. Basically the entrepreneur and the investor are baking a pie, each of them bringing some of the ingredients idea, intellectual property, funding and they have to agree upon who will get what share of the pie valuation, control repartition when and at which conditions the pie should be taken out of the oven exit and who should lose what in case the pie was burnt outliquidationEating the financing pie and having it too 10GCC- Macroeconomic environment

Cooperation Council of the Arab States of the Gulf (GCC)- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

Experienced unprecedented economic and social transformation over the last three decades

Heavy dependence of government revenues on volatile oil export receipts

The exchange rate has been effectively used as a nominal anchor, with GCC currencies pegged at fixed rates to the U.S. dollarSource IMF 12Key growth areas opportunities for investmentsRevenues from oil will ensure sustained government spending on construction efforts in infrastructure,aviation,and a host of other sector-level development efforts such as the Dubai International Financial Center (DIFC)and Dubai Health Care City (DHCC)Service sectors dependent on infrastructure for take-offKnowledge and Health 13Setting up business in the UAE

Strategically located to form an entry gate for eastern and western emirates and other GCC countries. Alongside the upcoming DIFC.

The most hi-tech park in the Gulf, being developed under the aegis of the Dubai Municipality.

Proposed to be built and operated jointly by private and public sector participation.

The park comprises of 3 zones linked by footbridges.

Dubai Municipality currently inviting applications for investing in the above projects, under a 30 year Build Operate Transfer contract. DM is also open to innovative ideas other than the projects mentioned above.

Approval to list must be obtained from the Emirates Securities Commodities Authority ESCA - Company incorporated with audited financials for at least two years, shareholders equity should be min AED 20m, of which 50 paid-up capital.

After DFM approval, the share registry is transferred to the Central Depository. Trading can commence post completion of the listing process

Foreign Company listing

Issuer must be a Public Joint Stock Company properly constituted under the relevant laws of its country of incorporation.

Issuer must appoint a local representative in the UAE to handle shares registrations, dividends, regulatory reporting etc

Issuer must be already listed on a recognized stock market, in home country.

In the UAE there are around 50 Banks with 400 branches. However these are geared principally for the

old economy

traditional trade finance

conventional banking.

It is not prudent for these banks to rely on short-term liabilities on (deposits of one and three months) to lend to start-up ventures or provide even late stage equity capital.

Besides, banks are constrained by a limit of 25 on exposure to commercial companies i.e. cannot invest more than 25 of shareholders funds in equity-like securities including bonds etc.

24Financial Fulfilment International Entrepreneurship

Dubai Investments PJSC/Emirates Industrial Bank were the only entities set up to provide start-up finance for large scale projects.

National financial institutions do rightly, focus on UAE nationals and their businesses.

Therefore, expatriate entrepreneurship must necessarily hinge on finding national partners / sponsors or a service agent or overseas equity flows.

Expatriate lending is to be viewed in the context of some large scale defalcations that had afflicted the UAE banks in the past. In the circumstances, understandably, there is reluctance to provide equity capital or long-term funding for expatriate entreprenuership

25Deregulation Privatization WTO Basel II

Etisalat no longer the sole service provider, after enjoying 28 years of monopoly status. Move prompted by economic and technological benefits

This is likely to see an influx of capital and technology into this sector

This sector could see an influx of economy and technology albeit of substantial scale

Technology and Transport were the top recipients of investments in 2003

Venture capital and private equity are globally becoming specialist activities for which they need specialist institutions.

These have not come into being as yet, except on the periphery, which is easy for instance, if it is a private equity department.

Established businesses that are unlisted, but have good viability and cash flow, are preferred to start-up ventures.

The authorities are now, in terms of listing of the free zone companies, likely to be more amenable. We can expect some path-breaking legislation in this regard.

An entrepreneur has to think out of the box along every aspect of the way, including in terms of meeting his financial objectives.

27The mutual entreprenuerial fund

Entities such as the Dubai Internet and Media Cities to set up dedicated group financing schemes or else support mutual funds.

As DIC was being conceived, that with Mr. Mohammad Al Gergawis support, Emirates Financial Services launched e-Securites and e-Venture funds.

TiE needs to associate itself and perhaps, some of its members provide cross-guarantees and form mentoring councils. It then becomes a case of the entrepreneurs, investors and those that understand the business better, of themselves, sharing and caring and taking some risks away and thus creating

new entrepreneurs

Therefore, there is no disproportionate distribution of burden merely on the financiers.

28

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